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As the Chairman of the Federal Reserve, Jerome Powell holds immense power over the United States economy and the stock market. Recently, there has been a growing sentiment among some investors that Powell’s policies may actually lead to a crash in the stock market. But this could also spell an opportunity of a lifetime for the Bitcoin and crypto market.
Powell’s policies have been incredibly accommodative, with the Fed keeping interest rates near zero and increasing the money supply through quantitative easing. While these policies have helped support the stock market and economy, they have also created serious imbalances and inflated asset prices.
Some investors believe that Powell’s policies are setting the stage for a major correction or even a crash in the stock market. They argue that these imbalances may eventually lead to a sell-off, particularly if interest rates rise or economic growth slows down.
This scenario could actually create an incredible opportunity for the Bitcoin and crypto market. In times of economic uncertainty or instability, investors often flock to alternative assets as a hedge against inflation and market volatility. Bitcoin, in particular, has emerged as a popular choice for these investors due to its limited supply and decentralized nature.
If there were to be a major correction in the stock market, Bitcoin and other cryptocurrencies could see a surge in demand as investors seek out alternative assets. An influx of capital into the crypto market could further increase the price of Bitcoin and other cryptocurrencies.
It’s worth noting that predicting market crashes is always a tricky business, and there are many factors that could influence the direction of the stock market in the coming months and years. While some investors may be betting on a crash, it’s important to remember that the stock market has also shown resilience in the face of economic challenges in the past.
That being said, the potential for a crash highlights the need for investors to diversify their portfolios and consider alternative assets like Bitcoin and crypto. As the world becomes increasingly uncertain and volatile, having a diversified portfolio that includes alternative assets like Bitcoin could provide an important hedge against market risk.
In conclusion, while Jerome Powell’s policies may raise concerns of a potential stock market crash, it also highlights the potential opportunity that Bitcoin and other cryptocurrencies can offer. As always, investors must remember to do their due diligence and consult with financial professionals before making any investment decisions.
2011 interview with Jerome Powell has given us a secret road map for what the FED is doing right now A lot of people are wondering will there be a soft Landing a hard Landing no landing at all and we have a couple of pieces of information that will make it extremely
Clear what the FED is trying to accomplish and by reading between these lines and anticipating some of these moves I believe that there is one of the biggest plays in the history of financial markets to be made right now you have to understand the ultimate goals and how the machine works so let’s
Go through this insane Revelation that’s coming from none other than Jerome Powell himself in an interview he conducted in 2011. so bad economic news drives people out of stocks and into bonds and when people go into bonds they bid up the price of bonds and that bids down the interest rate that the
Government is required to pay so that’s what’s happening now we have bad economic news last week another thing that draws people into our bonds is the turmoil in your Europe as it becomes more and more clear that that the Europe Europeans have not figured out what to
Do with the potential default of some of their major Nations and so Global money tends to come into treasury Securities at that time so that’s what’s going on remember at this time Jerome Powell was not the chairman of the Federal Reserve he was just a visiting scholar that was
Appearing on C-Span but what he said is very profound which is that essentially bad economic news drives people out of the stock market and into bonds effectively they buy the US government debt that is precisely what the government needs to do and I’ll show you this in one chart this chart is the
Treasury general account this is effectively the amount of discretionary spending that has been floating the economy and it’s the thing that has been offsetting the government’s default on its debt you see there’s all this excess cash in the bank their TGA that affects how much liquidity is in the markets but
Ignore all that what you need to understand is since 2021 this account has gone from almost two trillion dollars down to 61 billion dollars and 61 billion dollars might seem like a lot of money but it certainly ain’t when you’re trying to uphold the entire US economy so understand their goal is
Undoubtedly to replenish this by selling U.S bonds that means that roughly they’ll need to sell over 1.5 trillion dollars in U.S Bonds in order to get this account back to health now whether or not they make it there is a big question you better believe from Jerome
Powell’s own mouth that that is the goal so how do they do this because in the end if people don’t really want to buy bonds they’re going to have to pay an exorbitant amount of interest in order to sell those bonds they’ll have to pay a super high interest rate that means
That for every dollar that they raise to get this account back to its Health they’ll need to pay a higher amount of interest on that debt but only only if there is not a ton of bad economic news driving people out of stocks now first I want you to understand that the stock
Market while it is pushing back up to its prior highs specifically the S P 500 and those big indexes let’s go ahead and take a peek under the hood and understand what might be driving some of that Health listen to this it’s actually shocking say if there was a basket of
500 stocks and I told you the total return of 495 of them was Zero by the way he’s talking about the S P 500 here and talking about how 495 out of those top 500 have returned Net Zero gains in 2023 go on Kevin and just five of them were
Driving all of the gains for 2023. well this is actually what’s happening the S P 500 which is made up of 500 stocks is being driven solely by five stocks and those companies are Apple Nvidia Amazon Microsoft and Google if you remove those five stocks the average return of the S
P 500 for 2023 would be zero instead the S P 500 together is up a total of 10.3 percent year to date thanks to five stocks just one percent so the top five biggest stocks in the world are pretty much the only place anyone is putting
Money the other 495 stocks in the S P 500 are completely flat on the year despite a very very hot 2023 compared to 2022 so let’s draw some assumptions here we have five Mega cap stocks the biggest five stocks in the world that are upholding the entire equities markets
And we know that from Jerome Powell’s mouth himself he needs to see quote bad economic news to drive people out of stocks and into bonds we also know that the treasury general account has drawn down over 1.5 trillion dollars over the past year and a half or so and that they
Simply need to replenish this account one way or another and the way that they like to do it is by selling U.S government bonds and by selling them on the cheap so that they don’t have to pay that much interest they want a good deal put this news together with cracks in
Commercial real estate what we see is that LA’s office Towers right here in my hometown one just sold for 154 dollars per square foot the debt on the building is 230 dollars per square foot they’re effectively taking a 33 percent haircut on just the debt against the building
Not even the original value of the building make no mistake this is not an accident this is the direct consequence of going from a zero rate environment a free money environment where people could just borrow like crazy and then jacking up interest rates at a historic
Pace not only that but planning to keep hiking even though things are breaking that’s because what they don’t want to tell you the quiet part that they don’t want to say out loud Mr chair Jerome Powell doesn’t want to say that they absolutely need things to break they
Need things to break not only to control inflation but they need things to break to drive people into U.S government debt and if they don’t get people to panic out of the stock markets and start buying bonds then they’ll have to pay way too much money to replenish that
Account and they don’t want to do that so don’t listen to me listen to Fed chair Jerome Powell and his own words in 2011. they need bad economic news and they need it badly or else they won’t be able to fill up their coffers and keep paying for government expenses with any
Kind of reasonable interest rate but I know what you’re thinking Elliot what the hell does this have to do with crypto what does it have to do with my Bitcoins and my erythrums and my solanos well I’m here to tell you it has a whole
Hell of a lot to do with those things in the end we don’t know exactly how Bitcoin is going to perform in this economic drawdown if we get it let’s imagine that one of these five stocks or maybe all of them start to have some cracks some lower earnings caused by
Panic in the real estate markets I don’t know this is just hazarding a guess we might start to see weakness in those five stocks which would literally be weakness across the board in the stock market now we know that in recessions things like bonds and things like gold
Tend to do well is Bitcoin going to be priced like digital gold if so we might see a growth in the Bitcoin price is the China narrative going to bring new liquidity into Bitcoin and crypto maybe but it might take a while for that to mature the big thing to understand here
Is that when that bad economic news happens and the government is trying to drive you into buying its own debt the obvious move in my opinion is to DCA in and start collecting equities and other assets when they’re on fire sales that’s why we’ve been keeping a ton of dry
Powder on the side here buying little by little into the markets just in case we get this Black Swan like crash and if we do I believe that’s the time to load up on your favorite tech stocks your favorite cryptocurrency sees while everyone is flocking into cheap
Government debt I believe that that is precisely the opportunity again there are a lot of variables here we don’t know exactly how this is going to play out but this clip by Jerome Powell is an absolute superpower in understanding the true goals of the FED over the coming
Months and years as always if you enjoyed this you know what to do make sure you’re following me on Twitter I’ve been covering a lot of cool stuff here one of the new trends that’s been popping up in crypto land that I haven’t seen anything like this in quite some
Time is liquid staking derivatives kind of reminds me of early D5 days and so I’ve been tracking inflows of liquid staking derivatives as I’ve said before I cover different stuff on Twitter and I talk about even different stuff in the Discord groups that I’m a part of
Because a lot of the stuff is super risky but I find it fascinating and you know me I’m always obsessed with what’s happening next in crypto land so make sure to follow me on Twitter at Leo trades if you want to see me talk about a little bit deeper a little bit more
Advanced topics especially concerning new narratives and new types of coins in crypto as always if you enjoyed this video make sure to click on this one popping up right here is even better than the video you just watched we talk about literally how the Machine Works how money Works how to actually spot
Opportunities in the markets and I believe we are setting up for one of the biggest opportunities of a lifetime as always I’ll see you soon on the next episode foreign